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Last Updated: Friday, 9 February 2007, 09:36 GMT
FirstGroup buys Greyhound buses
Children board a Laidlaw yellow school bus
FirstGroup believes the buy will enhance its US operations
UK rail and bus operator FirstGroup has agreed to buy US-based yellow school bus firm Laidlaw for 1.9bn ($3.7bn).

The Illinois firm operates across 37 states in the US and six provinces in Canada, it also owns the Greyhound cross-country coach company.

Aberdeen-based FirstGroup will become the biggest US school bus operator as it will combine the buy with its First Student bus service - bought in 1999.

FirstGroup will issue 200m in new shares to finance the deal.

After the announcement shares in the UK group rose by 14 pence to 575p.

"FirstGroup's acquisition of Laidlaw will considerably enhance the group's existing activities in North America, which themselves have grown strongly since we first invested in the US in 1999," First Group chief executive Moir Lockhead said.

FirstGroup said in the first year of ownership it expected the purchase to generate about $70m (36m) of annualised pre-tax cost savings.

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